Abundia Global Impact Group, Inc.: Form 10-Q for the period ended Mar 31, 2025

Forward-Looking Information

This Form 10-Q quarterly report of Houston American Energy Corp. (the “Company”) for the three months ended March 31, 2025, contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are intended to be covered by the safe harbors created thereby. To the extent that there are statements that are not recitations of historical fact, such statements constitute forward-looking statements that, by definition, involve risks and uncertainties. In any forward-looking statement, where we express an expectation or belief as to future results or events, such expectation or belief is expressed in good faith and believed to have a reasonable basis, but there can be no assurance that the statement of expectation or belief will be achieved or accomplished.

The actual results or events may differ materially from those anticipated and as reflected in forward-looking statements included herein. Factors that may cause actual results or events to differ from those anticipated in the forward-looking statements included herein include the Risk Factors described in Item 1A herein and in our Form 10-K for the year ended December 31, 2024.

Readers are cautioned not to place undue reliance on the forward-looking statements contained herein, which speak only as of the date hereof. We believe the information contained in this Form 10-Q to be accurate as of the date hereof. Changes may occur after that date, and we will not update that information except as required by law in the normal course of our public disclosure practices.

Additionally, the following discussion regarding our financial condition and results of operations should be read in conjunction with the financial statements and related notes contained in Item 1 of Part 1 of this Form 10-Q, as well as the Risk Factors in Item 1A and the financial statements in Item 7 of Part II of our Form 10-K for the fiscal year ended December 31, 2024.

Critical Accounting Policies

The discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. We believe certain critical accounting policies affect the more significant judgments and estimates used in the preparation of our financial statements. A description of our critical accounting policies is set forth in our Form 10-K for the year ended December 31, 2024. As of, and for the three months ended, March 31, 2025, there have been no material changes or updates to our critical accounting policies.

Recent Developments

Drilling and Operating Activity

During the three months ended March 31, 2025, the six wells on the Finkle State Lease in which the Company is participating were in the process of being completed on March 31, 2025. At March 31, 2025, we had 4 wells on production in the U.S. Permian Basin.

Results of Operations

Oil and Gas Revenues. Total oil and gas revenues decreased 31% to $102,345 in the three months ended March 31, 2025, compared to $147,686 in the three months ended March 31, 2024. The decrease in revenue was primarily due to one well being shut down for a month during the quarter.

The following table sets forth the gross and net producing wells, net oil and gas production volumes and average hydrocarbon sales prices for the quarters ended March 31, 2025 and 2024:

(1) All well, production and price information excludes wells operated by Hupecol Meta.

The change in production volumes was primarily attributable to the natural decline in production.

The change in average oil and natural gas sales price realized reflects global energy trends.

Oil and gas sales revenues are entirely attributable to our U.S. properties.

Lease Operating Expenses. Lease operating expenses decreased 47% to $76,025 during the three months ended March 31, 2025, from $163,030 during the three months ended March 31, 2024. The decrease was primarily attributable to one well being shut for a month and the reporting of only two months of production for the quarter.

Depreciation and Depletion Expense. Depreciation and depletion expense was $21,885 and $34,978 for the three months ended March 31, 2025 and 2024, respectively. The change in depreciation and depletion was principally due to one well being shut for a month, and production data for March being unavailable for accruals.

General and Administrative Expenses (excluding stock-based compensation). General and administrative expense increased to $1,052,361 during the three months ended March 31, 2025 from $307,140 during the three months ended March 31, 2024. The change in general and administrative expense was primarily attributable to professional fees related to the proposed acquisition of Abundia Global Impact Group, LLC (“AGIG”), which is anticipated to close during the second quarter of 2025. (See Note 8)

Stock-Based Compensation. Stock-based compensation decreased to $14,057 during the three months ended March 31, 2025 from $50,667 during the three months ended March 31, 2024. This decrease was largely due to a decline in the Company’s share price from March 31, 2024 to March 31, 2025.

Other Income (Expense). Other income/expense, net, totaled $29,500 of income during the three months ended March 31, 2025, compared to $392,430 of income during the three months ended March 31, 2024. Other income consisted of interest earned from bank balances. The decrease in other income was due to no income from Hupecol Meta in 2025.

Financial Condition

Liquidity and Capital Resources. At March 31, 2025, we had a cash balance of $5,308,416 and working capital of $5,755,969, compared to a cash balance of $4,059,182 and working capital of $3,917,231 at December 31, 2024. This increase was primarily due to the Company’s sale of 2,600,000 shares of common stock in January 2025.

Cash Flows. Operating activities used $1,311,230 of cash during the three months ended March 31, 2025, compared to cash provided of $122,770 during the three months ended March 31, 2024. The change in operating cash flow was attributable to an increase in prepaid expenses ($330,669), and professional fees related to the proposed acquisition of Abundia Global Impact Group, LLC (“AGIG”), which is anticipated to close during the second quarter of 2025.

Investing activities used $160,000 of cash during the three months ended March 31, 2005, compared to none during the three months ended March 31, 2024. The Company paid a $160,000 refundable deposit as part of the acquisition process for RPD Technologies.

Financing activities provided $3,819,495 during the three months ended March 31, 2025, compared to $901,500 provided during the three months ended March 31, 2024. Cash provided by financing activities during the three months ended March 31, 2024 was primarily attributable to funds received from the sale of common stock.

Long-Term Liabilities. At March 31, 2025, we had long-term liabilities of $62,470, compared to $114,685 at December 31, 2024. Long-term liabilities at March 31, 2025, consisted of a reserve for plugging costs.

Capital and Exploration Expenditures and Commitments.

In the event that we pursue additional acreage acquisitions or expand our drilling plans, we may be required to secure additional funding beyond our resources on hand. While we may, among other efforts, seek additional funding from “at-the-market” sales of common stock, and private sales of equity and debt securities, we presently have limited authorized shares of common stock available for issuance to support equity capital raises and we have no commitments to provide additional funding, and there can be no assurance that we can secure the necessary capital to fund our share of drilling, acquisition or other costs on acceptable terms or at all. If, for any reason, we are unable to fund our share of drilling and completion costs and fail to satisfy commitments relative to our interest in our acreage, we may be subject to penalties or to the possible loss of some of our rights and interests in prospects with respect to which we fail to satisfy funding commitments and we may be required to curtail operations and forego opportunities.

Off-Balance Sheet Arrangements

We had no off-balance sheet arrangements or guarantees of third-party obligations at March 31, 2025.

Commodity Price Risk

The price we receive for our oil and gas production heavily influences our revenue, profitability, access to capital and future rate of growth. Crude oil and natural gas are commodities and, therefore, their prices are subject to wide fluctuations in response to relatively minor changes in supply and demand. Historically, the markets for oil and gas have been volatile, and these markets will likely continue to be volatile in the future. The price we receive for production depends on numerous factors beyond our control.

We have not historically entered into any hedges or other transactions designed to manage, or limit, exposure to oil and gas price volatility.

Evaluation of Disclosure Controls and Procedures

Under the supervision and the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation as of March 31, 2025 of the effectiveness of the design and operation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended. Based on this evaluation under the COSO Framework, management concluded that our internal control over financial reporting was not effective as of December 31, 2024. Such conclusion reflects our chief executive officer’s assumption of duties of the principal financial officer and the resulting lack of an appropriate level of accounting knowledge and experience commensurate with the financial reporting requirements for a public company, in particular with respect to technical accounting knowledge regarding accounting for certain transactions, including reserve inputs, asset retirement obligations, calculation of depreciation, depletion, and amortization, and the full cost ceiling test, and a related lack of segregation of duties. Until we are able to remedy these material weaknesses, we are relying on third party consultants to assist.

Changes in Internal Control over Financial Reporting

No change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934) occurred during the quarter ended March 31, 2025 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.